At the Dec. 13, 2012 meeting of the University of Michigan board of regents, provost Phil Hanlon briefed regents on the university’s annual letter to the state budget director, outlining the fiscal 2014 budget needs of the Ann Arbor campus. [link to .pdf of budget development letter] The 10-page letter, officially from UM president Mary Sue Coleman, makes the case that UM needs state support, and provides details of UM’s cost containment efforts, affordability, and impact on the regional economy.
The university also responds to the state’s request for suggestions for “formula funding” – a mechanism to standardize appropriations for higher education. The letter argues that this formula approach to funding for higher education, which has resulted in one-time allocations, should instead be used as base-level funding, to provide greater consistency for budget planning. The letter also argues that formula funding, which is based on year-to-year improvements, doesn’t recognize the high level of achievement that institutions like UM have already reached.
Regarding cost containment, the letter highlights UM’s efforts to eliminate $235 million in general fund expenses since 2004. A third phase that’s currently underway is targeting $120 million through 2017 in a combination of cuts and increased recurring revenues. More than $30 million in cuts have been identified in fiscal year 2013, which runs from July 1, 2012 through June 30, 2013.
The letter also includes sections on affordability and economic impact. For economic impact, the letter references the UM Entrepreneurship & Innovation website for more details.
UM’s FY 2013 general fund budget of $1.649 billion for the Ann Arbor campus, which regents approved in June, reflects a $4.3 million increase in UM’s state appropriation to $273.1 million – an increase of 1.6% compared to FY 2012. The previous year, in FY 2011, state funding to UM had been cut by 15%.
This report was filed from the Michigan Union’s Anderson room on UM’s central campus, where the regents held their December meeting.